Mortgage Rate Declines Spark Refinancing

Mortgage rates for a 30-year fixed-rate mortgage (FRM) averaged 5.16 percent with an average 0.7 point for the week ending February 12, 2009, according to Freddie Mac's newly released ""Primary Mortgage Market Survey"":http://www.freddiemac.com/pmms/release.html. That figure is down from last week when it averaged 5.25 percent. Last year at this time, the 30-year FRM averaged 5.72 percent.
According to Frank Nothaft, Freddie Mac's VP and chief economist, interest rates for 30-year fixed-rate mortgages are now almost 1.5 percentage points below 2008’s peak, which was set on July 24th. Nothaft says that lower rates have given many homeowners an incentive to refinance. He explained, ""This would translate into a monthly payment savings of around $188 on a $200,000 mortgage.""
Nothaft continued, ""The Bureau of Economic Analysis estimated that the weighted average mortgage rate of loans outstanding was about 6.2 percent in the fourth quarter of 2008. As a result, the share of refinancing among the total number of conventional mortgage applications has exceeded 50 percent for the past 11 weeks and averaged 80 percent over this period, according to the Mortgage Bankers Association.""
The 15-year FRM this week averaged 4.81 percent with an average 0.7 point, Freddie Mac reported. Last week, 15-year rates averaged 4.92 percent, and a year ago at this time, they averaged 5.25 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.23 percent, with an average 0.6 point, down from last week when they averaged 5.26 percent. A year ago, the 5-year ARM averaged 5.19 percent.
Based on Freddie Mac's market data, one-year Treasury-indexed ARMs averaged 4.94 percent this week with an average 0.5 point, up from last week when they averaged 4.92 percent. At this time last year, the 1-year ARM averaged 5.00 percent.
""Bankrate.com"":http://www.bankrate.com/brm/rate/mtg_home.asp also released its national weekly rate report on Thursday, saying that ""mortgage rates plunged after Treasury Secretary Tim Geithner pledged to reduce mortgage rates through an as-yet-to-be-determined housing initiative in the Financial Stability Plan."" Bankrate's analysis reflects similar rate declines but shows slightly higher numbers, as its study covers data provided by the top 10 banks and thrifts in the top 10 markets.
The 30-year FRM came in at 5.34 percent in Bankrate's report, down from 5.70 percent last week (avg. points: 0.37). The 15-year FRM averaged 5.03 percent, down from 5.31 percent last week (avg. points: 0.38). And the five-year ARM retreated to 5.37 percent, down from 5.50 percent last week (avg. points: 0.48).